LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 28, 2001
TO: Honorable John T. Smithee, Chair, House Committee on
Insurance
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1329 by Bivins (Relating to the regulation of
insurance and to requirements regarding motor vehicle
insurance; providing penalties.), As Engrossed
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1329, As Engrossed: positive impact of $0 through the biennium *
* ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 0 *
* 2004 0 *
* 2005 0 *
* 2006 0 *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Revenue Revenue Revenue *
* from State Gain/(Loss) Gain/(Loss) Gain/(Loss) to *
* Highway Fund from State from State Counties *
* 0006 Highway Fund Highway Fund *
* 0006 0006 *
* 2002 $(281,466) $0 $0 $0 *
* 2003 (2,050,941) 3,333,333 (440,000) (220,000) *
* 2004 (2,050,941) 5,000,000 (240,000) (120,000) *
* 2005 (2,050,941) 5,000,000 (220,000) (110,000) *
* 2006 (2,050,941) 5,000,000 (200,000) (100,000) *
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Technology Impact
The Department of Transportation (TxDOT) estimates that it will require
approximately $281,466 for programming costs in FY 2002 to modify the
TxDOT's computer systems to implement the provisions of the bill.
Fiscal Analysis
The bill amends the Transportation Code to add a new Subchapter. The
provisions of the bill requires TxDOT to conduct random sampling of
vehicle registrations for verifying proof of insurance. TxDOT may also
request proof of insurance from persons whose driver's license or
registration have been suspended within the preceding four years or an
owner who has been convicted of offenses found in Chapter 601,
Transportation Code. Vehicle owners deemed in violation of this section
would have their vehicle registration suspended until specific
requirements outlined in the bill are met. While TxDOT is required to
promulgate rules in deciding sample size and frequency, the provisions of
the bill require TxDOT to ensure that at least 500,000 samples are
selected on or before September 1, 2003.
For a first violation, an owner may reinstate the vehicle's registration
by paying a $100 reinstatement fee and providing proof of current
insurance. For a second or subsequent violation, the owner must complete
a four-month suspension period, provide proof of current insurance, and
pay a $200 fee. If an owner is found to have provided false proof of
insurance, the registration is suspended for a six-month period. After
the suspension for providing false proof, an owner may provide proof of
insurance and pay a $500 reinstatement fee.
The effective date of the bill is September 1, 2001, except that Article
1 of the bill takes effect January 1, 2003.
Methodology
TxDOT is required to sample at least 500,000 owners by September 1, 2003.
TxDOT estimates 41,666 vehicle owners will be sampled monthly beginning
in September 2002 for a total annual sample of 500,000 owners, thus
meeting the bill's requirement.
TxDOT estimates that each year 568,750 letters will be mailed (500,000
questionnaire letters will be mailed to the two sample categories and an
average of 68,750 warning notices will be mailed to owners subject to
possible suspension). In addition, TxDOT estimates that approximately
34,375 (average per year) certified suspension notices and 6,000
certified court supervision letters will be mailed by certified mail each
year.
TxDOT would outsource the primary day-to-day administrative functions and
responsibilities required by the bill to a private vendor. The vendor
would be responsible for all aspects of the program, with the exception
of analysis of responses from registrants. It would also be responsible
for verification results to determine the need for suspension or other
action, coordination of needed actions with the vendor, and
adding/removing suspension notations. The estimated cost to administer
and outsource the contract is $1,950,941 per year beginning in fiscal
year 2003.
TxDOT estimates that the Warning Notice advises the registrant of their
option to contest the suspension by requesting a hearing and assumes that
the TxDOT will receive an estimated 100 requests for hearings annually.
It is assumed that the State Office of Administrative Hearings (SOAH)
will conduct the hearings. During FY 1998, the average cost of a SOAH
hearing for five TxDOT divisions was $1,000. Based on $1,000 per hearing
and an anticipated 100 hearing per year, TxDOT estimates the total cost
starting in fiscal year 2003 is $100,000.
TxDOT assumes that 50 percent will provide sufficient proof of insurance.
Of the 50 percent that do not provide sufficient proof of insurance and
are suspended, it is assumed that 90 percent will come into compliance
and will resolve the suspension during the given year. Of the resolved
suspensions, it is also assumed that 98 percent of the suspensions will
be for first violations, 1 percent will be for second or subsequent
violations, and 1 percent will be for providing false proof of insurance.
Since the reinstatement fees are not effective until January 1, 2003,
the revenue would only be in effect eight months of the fiscal year.
TxDOT estimates that it will experience a revenue loss due to the
denial/delay of registration issuance because of suspensions placed on
motor vehicle records. It is assumed that 10 percent of owners whose
registrations are suspended will not come into compliance at any point
in a given fiscal year.
Local Government Impact
According to TxDOT, counties will experience a revenue loss due to the
denial/delay/evasion of registration issuance because of suspensions
placed on motor vehicle records. TxDOT estimates that 10 percent of
owners whose registrations are suspended will not come into compliance
at any point in a given fiscal year.
Source Agencies: 405 Texas Department of Public Safety, 601 Texas
Department of Transportation
LBB Staff: JK, JO, RT, DE